DOES MONEY MATTER?:
WEALTH ATTAINMENT AS
THE MOTIVE
FOR INITIATING
GROWTH-ORIENTED
TECHNOLOGY VENTURES
RAPHAEL AMIT
KENNETH R. MacCRIMMON
CHARLENE ZIETSMA
The University of British Columbia,
Vancouver, British Columbia, Canada
JOHN M. OESCH
Northwestern University, Evanston, Illinois
The desire to attain personal wealth has long been regarded as the foremost
motive for entrepreneurship. Other goals and values, however, may also contribute to entrepreneurial motivation. Thus, the extent to which money matters relative to other motives is an empirical question. In this study we examine the role of wealth as the motive for the decision to found new ventures.
Three focal questions guide our research: 1) does money matter more relative to other decision dimensions in deciding to start a new high-technology venture? 2) does money
matter more to entrepreneurs compared to non-entrepreneurs? and 3) does money matter in absolute
terms, that is, does a decision model that focuses solely on the motive of wealth attainment parsimoniously
predict entrepreneurs’ start-up decisions?
We conducted in-depth interviews with 51 entrepreneurs and a control group of 28 senior managers
who decided not to start ventures (non-entrepreneurs) in the high-technology industry in British Columbia to address our research questions. The motives we examined are wealth attainment and an aggregate of
EXECUTIVE
SUMMARY
Address correspondence to Dr. R. Amit, Faculty of Commerce and Business Administration, The University of British Columbia, 2053 Main Mall, Vancouver, B.C. V6T 1Z2 Canada; Phone: (604) 822-8481; Fax:
(604) 822-5350; E-mail: [email protected]
The authors thank the Social Sciences and Humanities Research Council (Grant No. 412-93-0005) for
generous support of this research. Zhen Wang and Connie Ho provided substantial assistance in the data
analysis. We thank S. Venkataraman, C. Brush and anonymous reviewers for helpful comments on this paper.
Journal of Business Venturing 16, 119–143
 2000 Elsevier Science Inc. All rights reserved.
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
other dimensions identified by entrepreneurs and managers. We considered three components of values:
participants’ ratings of the importance of various decision dimensions, their rating of the salience of these
dimensions, and their satisfaction with prior levels of attainment on those decision dimensions. We assessed beliefs as participants’ perceived probability of attaining their desired level of a particular decision
dimension in each of three alternatives: the position held at the time the venture decision was made, the
venture itself, and the next best career alternative at that time. The data were analyzed to compare entrepreneurs’ values and beliefs regarding wealth with an aggregate of other decision dimensions (our relative
hypotheses), and with those of non-entrepreneurs (our comparative hypotheses).
Our findings do not support the common perception that money is the only, or even the most important, motive for entrepreneurs’ decisions to start new ventures. Wealth attainment was significantly less
important to entrepreneurs relative to an aggregate of 10 other decision dimensions, and entrepreneurs
did not rate wealth as any more important than did non-entrepreneurs. Non-entrepreneurs rated wealth
as no more important than other motives. Wealth attainment was also significantly less salient to entrepreneurs’ decisions to venture than were other motives. Non-entrepreneurs reported that wealth was significantly more salient to their decision against founding a venture than other dimensions. In fact, non-entrepreneurs rated wealth attainment as significantly more salient to their decision against founding than
entrepreneurs rated it for their decision to proceed with starting a high-technology business. A significant
number of entrepreneurs started businesses even when they believed that doing so offered them a lower
probability of obtaining their most desired level of wealth than did one of their other alternatives.
Satisfaction ratings and stated beliefs also dispute classical predictions. Just prior to making the
decision to venture, the entrepreneurs in our study were as satisfied with wealth as they were with other
decision dimensions. The non-entrepreneurs were actually more satisfied with wealth attainment than
with other dimensions. A comparison of the groups revealed no difference in satisfaction with wealth
attainment levels. Entrepreneurs did believe that their chances of attaining their desired level of wealth
were much greater through founding a new high-technology venture than through their other alternatives.
This difference in beliefs, however, was not significantly greater than their optimistic beliefs about chances
of attaining desired levels of other dimensions. It was significantly higher compared to the non-entrepreneurs’ belief difference measures for wealth. In fact, the entrepreneurs’ stated beliefs regarding the chances
of attaining their desired levels of all dimensions were higher than those of the non-entrepreneurs, suggesting that entrepreneurs were simply more optimistic at the time of their decision than non-entrepreneurs.Salience findings suggest that these optimistic beliefs about wealth did not motivate the founding
decision alone.
We can distinguish those people who successfully started ventures by their regard for wealth as a
less salient factor, and their beliefs in higher chances of a venture producing monetary and other returns.
Other motives, such as innovation, vision, independence, and challenge were more important and much
more salient to this sample of entrepreneurs.
Our findings have implications for practice, teaching, and research. Venture capitalists who partially
base their assessment of entrepreneurs on the extent to which they are motivated to make a great deal
of money may benefit from reconsideration of this criterion. We have evidence of one group of hightechnology entrepreneurs who achieved success without placing much decision weight on attainment of
personal wealth. Nascent entrepreneurs and those who teach entrepreneurship can use this empirical finding to argue two main points: 1) not all entrepreneurs found a business for personal wealth reasons, and
2) one need not be motivated by personal wealth attainment to be a successful entrepreneur. Similarly,
theoretical models that assume money is the primary motive for entrepreneurial activity require re-examination. Future research in entrepreneurship should focus less on wealth attainment and more on other
motives for the venturing decision. A multiple-attribute decision model may be able to more fully explain
venturing decisions.  2000 Elsevier Science Inc.
INTRODUCTION
The assumption that people start new ventures as a way to increase their personal wealth
underlies much of the research in entrepreneurship. Campbell (1992), for example, de-
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lineated an economic decision model for entrepreneurial acts, such as start-up decisions,
in which an entrepreneur’s comparison of the net present values of entrepreneurship
and wage labor determined whether the entrepreneurial activity would be undertaken.
According to Day and Sunder (1996, p. 140) “the neo-classical abstraction of the firm
is an entrepreneur who maximizes profit subject to various resource constraints.” Traditional measures of success for entrepreneurs emphasize monetary factors such as firm
revenue, profitability, and the creation of personal wealth, along with a myriad of other
indicators such as revenue growth and sustainability. The goal of personal wealth is assumed paramount. Thus, the terms “wealth” and “entrepreneurship” are inextricably
linked in the minds of many people, including researchers, in capitalist societies. Precisely because the assumed link between the desire for wealth attainment and an entrepreneur’s decision to venture is so deeply embedded in our culture, it is worth asking
whether this assumption is borne out by empirical evidence.
We assume that money matters, and is not only a goal for entrepreneurs, but is
also the foremost motive for venturing. Other goals and values, however, may also contribute to entrepreneurial behavior (Kuratko, Hornsby, and Naffziger 1997; Monroy
and Folger 1993). In fact, Roberts (1991) found that money was not a significant motive
for the initiation of high-technology ventures; motives such as independence and challenge were more important. Thus, the extent to which money matters relative to other
decision dimensions is an empirical question. The primary question “does money matter?” requires an object. We are specifically interested in the role that the desire for
wealth attainment plays in start-up decisions made by entrepreneurs. We assume that
money matters more to entrepreneurs than to non-entrepreneurs because of the traditional association between entrepreneurship and wealth.1 Yet this, too, is an empirical
question. Three focal questions guide our research: 1) Does money matter more relative
to other decision dimensions in deciding to start a new venture? 2) Does money matter
more to entrepreneurs as compared to a control group of individuals who decide not
to start a new venture? and 3) Does money matter in absolute terms, i.e., does a decision
model which focuses solely on the motive of wealth attainment parsimoniously predict
entrepreneurs’ start up decisions? These questions have received scant attention in the
entrepreneurship literature.
This study addresses the role of wealth attainment as a motive for decisions to start
a new business in the context of technology industries in British Columbia. This industry
is useful for testing traditional models of new venture decision making because of the
high rate of career mobility, including venturing. There are three reasons why we focus
on money in isolation rather than giving equal attention to the other possible goals.
We do not claim that rational economic maximizers take only money into account, but
it is a common practice for researchers to focus only on money as a proxy for that which
is truly being maximized. However, while a rational decision maker with considerable
information-processing capability may be able to take a number of goals into account,
a logical initial focus of study is to ascertain whether decisions can be explained by a
single dimension. Only if an explanation based on a single goal is insufficient would
one want to utilize a more complex multiple-goal model (Douglas and Shepherd 1996).
1
It is tempting to consider agency theory as a justification for this assumption, since agency theory predicts differences between the motivational factors of owners, as residual claimants, and managers, as nonresidual claimants (see, e.g., Jensen and Meckling 1976; Jensen and Murphy 1990). However, in the context
of this study, both entrepreneurs and managers are making the decision of whether or not to become owners.
Thus, agency theory is not useful in this context. We thank an anonymous reviewer for this point.
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FIGURE 1 Overview of decision making model.
Bounded rationality is another reason to focus on only money. Assuming individuals are limited in their information-processing capabilities, we would expect to find assessments of a restrictive set of valuations and a restrictive beliefs assessment (Simon
1957). Thus the bounded-rationality perspective is captured by considering only the single goal of money. The final reason for considering the importance of only money in
the venturing decision is the traditional association between entrepreneurship and the
possibility for personal wealth.
THEORY DEVELOPMENT
All cognitive models of decision making emphasize two primary components: (1) values
and (2) beliefs. Decision makers are assumed to strive toward attaining what they value
subject to their beliefs. In expected utility models, values take the form of utility functions and beliefs take the form of (subjective) probabilities (MacCrimmon 1990). In
prospect theory (Kahneman and Tversky 1979), value functions reflect the values and
decision weights reflect the beliefs. Other significant decision models rely on the same
two major components. Even in theories of bounded rationality, such as satisficing (Simon 1957), values are reflected in aspiration levels and beliefs in expectations. In this
paper, the model of decision making regarding venturing is comprised of a value, represented by wealth attainment, and beliefs about chances to attain a most desired level
of wealth in the context of two or three career alternatives. The model is presented in
Figure 1.
In addressing the question of how money matters to the start-up decision, we focus
on three key manifestations of the value component (importance, salience and satisfaction), and on the belief component. We examine how important wealth attainment is
to entrepreneurs in all decision contexts. We investigate how salient money is to entre-
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123
preneurs when they are deciding between starting new ventures and pursuing other career alternatives. We explore whether dissatisfaction with wealth attainment in the nonentrepreneurial job motivates nascent entrepreneurs to consider new ventures, as
proposed by Herron and Sapienza (1992). We examine the differences between the expected money from the entrepreneurial alternative and the expected wage from other
career alternatives, and we assess how sensitive individuals’ choices are to changes in
their beliefs about the potential for those alternatives to generate money.
For each of these value elements and beliefs, we investigate entrepreneurs’ ratings
of wealth attainment both relative to their ratings of other decision dimensions and compared to non-entrepreneurs’ ratings of wealth attainment. The next section elaborates
on the value elements, beliefs and alternatives in decisions about venturing. We generate relative and comparative hypotheses for each element and component.
Value Elements
Importance
The first value element is basic importance. Importance is a fundamental relationship
among values that spans all decision contexts. If money were the driving force behind
decisions to found new ventures, we would expect that wealth attainment would have
a preeminent importance ranking in an entrepreneur’s underlying set of goal dimensions. In this scenario, nascent entrepreneurs would evaluate all career choices primarily
on the basis of wealth attainment. When considering the relative importance of various
decision dimensions, they should rate wealth attainment as highly important. They
should also place comparatively more importance on the dimension of wealth than do
decision makers, with similar backgrounds and prospects, who do not start new ventures. These predictions are summarized in our first two hypotheses (all stated hypotheses are “alternative” hypotheses; i.e., the null hypotheses tested statistically are that the
two ratings are equal):
H1: (Relative importance) Entrepreneurs give higher importance ratings to wealth
attainment than to other decision dimensions.
H2: (Comparative importance) Entrepreneurs give higher importance ratings to
wealth attainment than do non-entrepreneurs.
Salience
The second value element is salience. Importance and salience are conceptually similar
but salience is particular to a specific decision situation, while importance is more general. Wealth attainment could be particularly salient to one career decision and less
salient to another, depending on a decision maker’s financial situation at the time of
each decision. If money matters to the decision to found a new venture, wealth should
be viewed as a salient consideration in making a decision relative to other decision dimensions. The higher the salience of money, coupled with the belief that wealth attainment is more likely from a new venture, the more likely it should be to observe new
venture creation. Because salience is decision-specific, predictions involving non-entrepreneurs focus on a particular decision that included starting a venture as one alternative. For these decisions, our model suggests that non-entrepreneurs rate wealth attainment as less salient than do entrepreneurs. We thus form the following hypotheses:
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
H3: (Relative salience) Entrepreneurs rate wealth attainment as more salient to
their decision to found a venture than other decision dimensions.
H4: (Comparative salience) Entrepreneurs’ salience ratings of wealth attainment
are higher than those of non-entrepreneurs in the context of new venture decisions.
Satisfaction
The third value element is level of satisfaction. The decision to start a business should
depend on whether the decision maker is currently experiencing a satisfactory level of
attainment on the wealth dimension. In Herron and Sapienza’s (1992) venture initiation
model, dissatisfaction drives search, and the type and level of dissatisfaction matter.
Thus the higher the level of dissatisfaction with current wealth attainment, the stronger
would be the drive to change to a situation that promises a higher degree of wealth
attainment, that is, starting one’s own business.
Management positions in technology firms often pay well, sometimes providing
generous stock option plans and/or small ownership stakes. These provide a satisfactory
level of personal wealth for many people. But for those who would be satisfied only
with very high levels of wealth, business ownership in high-growth technology industries
affords opportunities for the creation of a great deal of personal wealth. If traditional
economic models of entrepreneurship are correct, wealth maximization should explain
most of the decision to found a high-growth venture. Our model considers satisfaction
and dissatisfaction with wealth attainment as drivers of career decisions, leading to the
following hypotheses:
H5: (Relative satisfaction) Entrepreneurs are less satisfied with wealth attainment
in their previous positions than they are with their level of attainment in other decision dimensions.
H6: (Comparative satisfaction) Entrepreneurs are less satisfied with wealth attainment in their previous positions than are non-entrepreneurs.
Beliefs
For decisions made in an environment with no uncertainty about outcomes, one knows
which alternatives lead to specific goals. Only the relative value to the decision maker
of each goal need be considered. However, in an uncertain environment, as is obviously
the case for entrepreneurs, a decision maker cannot be sure about the outcomes of various alternatives. Hence, in addition to value assessments, one needs to make belief assessments.
Decision makers cannot assess beliefs for all possible levels of wealth attainment.
We assume that boundedly rational individuals are not able to assign probabilities for
more than a few possible levels of wealth attainment. Consistent with this, and the principle of parsimony, we therefore focus on only one possible level of wealth attainment,
the “most desired level.” We assume that individuals can describe, visualize, and assign
a probability for attaining this level.
Note that we are not examining “satisficing,” as we are not asking respondents to
indicate a “satisfactory” level of wealth. Rather, we ask about their most desired level
of wealth and the probabilities of attaining that level for each alternative. Thus, by focusing on the “most desired level of wealth,” we hold payoffs constant across alternatives,
WEALTH AND TECHNOLOGY VENTURES
125
leaving probabilities of realizing that level as the sole determining factor in the maximization.
We describe perceptions of the chances of acquiring some or all of the wealth one
desires as probabilities expressed in percentage terms. For entrepreneurs, their beliefs
about the probability of attaining the most desired level of wealth should be higher for
the new venture alternative than for the non-venture alternatives. Thus, we examine
the difference between the perceived chance of attaining the desired level of wealth
(and other dimensions) for the new venture alternative and the higher of the believed
percentage chances for either the previous position or the next best alternative. We
label this measure “belief difference,” and predict the following:
H7: (Relative Belief Differences) Entrepreneurs have higher belief differences for
wealth than for other dimensions, holding payoffs constant across alternatives.
H8: (Comparative Belief Differences) Entrepreneurs have higher belief differences
for wealth than do non-entrepreneurs, holding payoffs constant across alternatives.
Decisions depend on the beliefs of the decision maker about the degree of goal attainment expected from each alternative. If wealth attainment is the only (or the primary)
goal, would-be entrepreneurs will start ventures only if they believe venturing offers
the highest possibility of attaining desired wealth goals. On the other hand, non-entrepreneurs may attend more to non-monetary goals.
H9: (Relative Beliefs) Entrepreneurs choose the alternative that they believe offers
them the highest chance of attaining their most desired level of wealth.
H10: (Comparative Beliefs) Entrepreneurs are more likely to choose the alternative
they believe offers them the highest chance of attaining their most desired level of
wealth than are non-entrepreneurs.
In developing these hypotheses, we assume that the most desired level of wealth stated
by our respondents truly corresponds to their most desired level and not to some satisficing level, and therefore conclude that choosing on the basis of probability would be
wealth maximizing. It is possible that respondents could imagine that entrepreneurial
ventures would lead to payoffs which exceed their most desired levels. In this case, maximizing expected wealth may mean choosing entrepreneurship, even though it has a
lower probability for generating the most desired level of wealth, since the probability
of attaining an even greater level of wealth may be higher for entrepreneurship than
for employment. Our data do not allow us to address this issue as practical concerns
prevented us from obtaining a full distribution of wealth payoffs and probabilities for
all alternatives. We assume that the most desired level of wealth stated by our respondents truly corresponds to their most desired level and not to some satisficing level, and
therefore conclude that choosing on the basis of probability would be wealth maximizing.
Another possible concern is that the stability of income and the risk aversion of
respondents are not factored into our model which tests wealth as the only goal. We
do measure respondents’ stability beliefs as one of the other 10 decision dimensions,
considering it separately from wealth. While the stability or pattern of payments may
affect the desirability of wealth expectations, only the total wealth expectations from
an option are relevant to the test of a money-only model. We did ask respondents to
consider an income stream over a 5- to 10-year period, suggesting that some stability
was built into the question. The riskiness of the total income stream is factored into
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
respondents’ beliefs, since the probabilities of attaining a single wealth goal from two
or more options directly captures a risk assessment. Also, we assume that employment
is usually considered more stable and less risky than entrepreneurship. Thus if risk aversion and desire for stability are influencing the results, we would expect them to decrease
the incidence of entrepreneurship. We will interpret our results in this light.
Third, our question did not specifically address the option value of choosing any
of the alternatives. Ronstadt (1988) argued that starting a venture can lead down a corridor in which other venture options become available to the venturer. It is possible that
respondents were factoring this option value into their decisions to venture or not venture, leading to choices that would appear to be suboptimal with respect to wealth in
the short term. However, our questions did ask respondents to consider their income
stream for a 5- to 10-year period if they selected each alternative. If they were considering option values, it is likely that at least some of those options would be realized during
that time period, thereby being included in their probability assessments. Furthermore,
employment also has option value in terms of promotions, stock options, exposure to
other venture alternatives, etc., which is also likely to be included in respondents’ decision-making. These issues cannot be teased out with our data, yet we suspect that their
influence would be marginal for the above reasons.
These 10 hypotheses state our predictions based on the single-attribute decision
model described earlier. The next section describes the methods we used to test
these hypotheses.
METHODS
Sample
This study tests the above hypotheses in the technology industries in British Columbia.
We selected the high-technology sector because of its importance in both the local and
global economies, and its characteristics of high career mobility and new venture initiation. We define a high-technology entrepreneur as someone who was a principal in the
founding of a high-technology venture. All entrepreneurs have equity stakes in their
businesses, and most spend their work days building their businesses. Because our theoretical framework is built on a choice model, we sought a control group of high-technology executives who considered founding a venture but decided not to.2 These nonentrepreneurs are at the senior manager level positions in various British Columbia
technology firms.
The first contact with potential participants in this study involved mailing a onepage questionnaire to members of the British Columbia Technology Industries Association (BCTIA). The questionnaire asked respondents about current employment status,
whether participants had considered the decision to found a venture, and if so, how
long ago. Of the 1,821 initial surveys sent, 630 were returned, for a response rate of
35%. Of these, almost 77% indicated that they had considered founding a venture (reported in Amit, MacCrimmon, and Oesch 1997).
We considered several criteria when selecting our sample. First, we wanted a group
of people whose career decisions were reasonably recent. We also looked for people
whose positions suggested that they were the principal force behind their ventures.
2
We refer to these control group members as non-entrepreneurs throughout the paper.
WEALTH AND TECHNOLOGY VENTURES
127
From our initial list of over 600 people, we contacted individuals whose current position
indicated that they were the top manager, owner, or founder of their firm. A periodic
scan of local media alerted us to some entrepreneurs and non-entrepreneurs who were
not members of the BCTIA, and we contacted these individuals by phone as well. A total
of 54 entrepreneurs agreed to interviews. The non-entrepreneurs consisted of BCTIA
members and others who considered founding a venture but decided either to stay in
their job at that time, or to take another position at that time. These senior managers
were also contacted by phone; 31 agreed to be interviewed.
Design
We shaped the interview content and protocol through pilot testing. Pilot participants
helped us sharpen our focus and ensure that our questioning methods were reliable
(procedures are described in Amit, MacCrimmon, and Oesch 1997). Participants were
interviewed at or near their places of business; a small number of interviews took place
in participants’ homes. Over half of the entrepreneur interviews included the participant, one primary interviewer, and one observer. The role of the observer was to ensure
that all topics and objectives were covered. Once the primary interviewers became comfortable with the content and flow of these in-depth sessions, the remainder of the interviews were completed by just one of the members of the research team, including all
of the non-entrepreneur interviews.
Each interview consisted of three main sections, although the structure of the interview was somewhat loosely enforced, as opportunities to delve into particular aspects
of decision making presented themselves. First, participants were encouraged to give
summary descriptions of their career paths to date, and to tell the story of the businesses
that they founded, or the companies for which they worked. From this semi-structured
portion of the interview, we hoped to gather information about who was involved in
founding the venture, how the decision was made, in what personal context the decision
was made, and who else affected the decision. Throughout the interviews, we reminded
participants that we were asking about their values and beliefs about alternatives at the
time of their decision.
The second part of the interview was highly structured. For each of the eleven decision dimensions identified in the earlier research, beginning in each case with wealth,
we asked for detailed information according to the form provided in the Appendix A.
This form indicates how we operationalized values and beliefs for our decision-making
model. The focal decision was the choice among the participant’s position at the time
of the decision (called “previous position”), the founding of a new business venture
(called “new venture”), and another alternative position that the participant considered
at that time (called “next best alternative”). Not all participants made a choice from
among three alternatives. For 3 of the 51 entrepreneurs, the prior position had been
eliminated. For 25 of the entrepreneurs and 11 of the non-entrepreneurs, no next best
alternative was actively considered at the time of the decision, and these participants
therefore made a choice from two alternatives. Obviously, we could not record beliefs
about alternatives that decision makers did not consider seriously at the time of the
decision, but value measurements (salience, importance, and satisfaction) for decision
dimensions do not depend on the number of alternatives that decision makers consider.
The primary interviewer led each participant through all of the questions for each of
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
the decision dimensions, as well as a relative importance rating exercise, and trade-offs
between wealth and other dimensions. The 11 dimensions are listed in Appendix B.
After precisely describing our definitions of a decision dimension, we asked participants to rate importance, salience and satisfaction on a 7-point scale. As an introduction
to the belief judgments, we asked participants to recollect what their most desired level
of that dimension was at the time of the decision, and also their least desired level. Then
we asked them to indicate what they believed their chances were of obtaining all of
their desired level of that dimension. A typical response on the wealth dimension might
be that an individual thought that by staying in the previous position there was a 20%
chance of attaining all of the desired money they wanted, the next best alternative presented a 30% chance, and the new venture offered a 70% chance. The figure of relevance
to our analysis is the difference between the belief level for the new venture and the
maximum belief level of the other two alternatives. The following equation demonstrates our calculation of “belief difference”:
Belief Difference ⫽ Percent chance of achieving most desired level with New Venture—MAX [Percent chance with Previous Position, Percent chance with Next
Best Alternative.]
Thus in our numerical example, the belief difference is 40%.
In the importance rating exercise, participants gave a relative importance weighting
to each dimension when all dimensions were considered simultaneously, based on an
anchor weighting of 100 for wealth. For example, if another dimension were half as
important as wealth, an individual would provide a rating of 50 for that dimension. If
it were three times more important, it would get a rating of 300. We also asked participants to identify a minimum belief level that would still lead to a decision in favor of that
alternative when the wealth expectations for their other alternatives were held constant.
The third part of each interview was less structured and less uniform than the first
two sections. Several follow up questions allowed the primary researcher to ask about
special circumstances, for further interpretations of the participant’s story, and if there
was anything else that the participant wanted to add. This part of the interview presented
an opportunity for clarifications of any apparent inconsistencies between quantitative
measures and qualitative accounts. The interviews averaged over 2 hours with a range
of 1 to 4 hours.
RESULTS
We interviewed a total of 54 entrepreneurs and 31 technology industry managers. Data
from three of the entrepreneurs and three non-entrepreneurs were excluded from analysis because their responses were incomplete. All analyses therefore include 51 entrepreneurs and 28 non-entrepreneurs. Table 1 presents means, standard deviations, and
correlations among the salient measures from the interviews with entrepreneurs.
Because “importance” ratings allowed participants to provide their own maximum
and minimum ratings, for better comparability, we calculated z-scores for each participant across all decision dimensions. These z-scores were used in all subsequent analyses.
The “salience of wealth” to the particular decision to found the venture in question
was correlated to the “importance of wealth” to any career decision at r ⫽ 0.47. This
correlation is predictable as those who rate wealth as very important will likely consider
it in most career decisions. “Wealth importance” was not correlated with any of the
0.84
1.71
1.75
0.78
1.17
43.90
22.95
3.67
4.12
4.77
4.01
24.50
27.07
S.D.
⫺0.60
** p ⬍ 0.01 (2-tailed); * p ⬍ 0.05 (2-tailed).
1. Wealth Importance
(z-scored)
2. Wealth Salience
(7-point scale)
3. Wealth Satisfaction
(7-point scale)
4. Other Salience
5. Other Satisfaction
6. Wealth Belief Differences
7. Other Belief Differences
Mean
⫺0.01
⫺0.27
0.02
0.22
0.08
0.47**
—
1
TABLE 1 Bivariate Correlations for Entrepreneurs (N ⫽ 51)
⫺0.21
0.29*
⫺0.39**
0.48**
0.34*
—
2
—
⫺0.12
0.34*
⫺0.41**
⫺0.25
3
—
⫺0.44**
0.24
0.23
4
—
⫺0.39**
⫺0.53**
5
—
0.39**
6
—
7
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
belief difference measures, but “wealth salience” was correlated to all of them (at r ⫽
0.48 for Wealth belief differences, and r ⫽ 0.34 for other belief differences). This supports our claim that “importance” and “salience” are distinct, and must be considered
separately. “Wealth salience” did not correlate significantly with “satisfaction” (r ⫽
⫺0.21), indicating that entrepreneurs did not consider wealth solely because of prior
dissatisfaction when deciding to found a new venture. Satisfaction with wealth was negatively correlated with wealth belief differences (r ⫽ ⫺0.41), suggesting that most entrepreneurs truly believed in their chances for improving their personal wealth.
Table 2 presents similar results for the control group of non-entrepreneurs. Correlation patterns differ from the entrepreneur group. “Wealth salience” did not correlate
significantly with any other variable for non-entrepreneurs. For those who rated wealth
as “important,” other decision dimensions were less salient to their decision against
founding a venture (r ⫽ ⫺0.52). Belief differences for non-entrepreneurs correlated
only with other belief differences, in contrast to the entrepreneurs (r ⫽ 0.68). These
two tables suggest that non-entrepreneurs were somewhat more satisfied with current
wealth attainment, and also with attainment in the other decision dimensions.
The remainder of the results section of this paper is structured around the two types
of hypotheses, relative and comparative. Table 3 presents results for both relative
hypotheses (reading across row 1 in each panel) and comparative hypotheses (reading
down column 1 in each panel). T-test values and two-tailed significance results are presented in row and column 2, between the scores they are comparing.
The Importance of Money
The results for importance are reported in Panel A of Table 3. We contrast entrepreneur’s importance score for wealth attainment (column 1 in row 1), with that of their
score for other decision dimensions (column 3 in row 1), finding that entrepreneurs gave
a lower importance rating to personal wealth attainment (⫺ 0.60) than to an aggregate
of the other 10 decision dimensions used in this study (0.06). We therefore reject Hypothesis 1. The findings indicate a significant difference in the opposite direction to what
we expected (t ⫽ 5.09, p ⬍ 0.001). Money was less important to this group of high-technology entrepreneurs than were the other decision dimensions.
A comparison of entrepreneurs’ importance ratings (row 1 in column 1, ␮ ⫽ ⫺0.60)
with non-entrepreneurs’ importance ratings (row 3 in column 1, ␮ ⫽ ⫺0.30) indicates
that there is no statistical difference between the importance rating of entrepreneurs
and the importance rating of senior managers who decided against founding a business
(t ⫽ ⫺1.42). Hypothesis 2 was therefore not supported. Again, the results are opposite
to what we predicted. Non-entrepreneurs did not rate money as significantly more or
less important than an aggregate of the other 10 dimensions (t ⫽ 1.6). These findings
are bolstered by examining how “wealth” ranked in importance for the entrepreneurs.
As Table 4 indicates, out of eleven decision dimensions, wealth ranked last in importance. All other decision dimensions were rated above 100 on average, with the 10th
ranked dimension (stability) rated at 150. The most important dimension (innovation)
was rated at 317, or over three times as important as wealth attainment. For the nonentrepreneurs, wealth also ranked as least important, but the most important dimension
(challenge) was rated at only 193 and the 10th rated dimension (stability) at only 113.
0.97
1.14
1.53
0.96
1.14
41.83
21.13
4.96
4.66
5.01
4.14
⫺4.64
13.70
S.D.
⫺0.30
** p ⬍ 0.01 (2-tailed); * p ⬍ 0.05 (2-tailed).
1. Wealth Importance
(z-scored)
2. Wealth Salience
(7-point scale)
3. Wealth Satisfaction
4. Other Salience
5. Other Satisfaction
6. Wealth Belief Differences
7. Other Belief Differences
Mean
0.24
⫺0.19
⫺0.52**
0.18
0.23
0.16
—
1
TABLE 2 Bivariate Correlations for Non-Entrepreneurs (N ⫽ 28)
—
⫺0.23
0.03
⫺0.02
⫺0.09
0.14
2
—
0.21
0.49**
⫺0.07
⫺0.25
3
—
0.18
⫺0.28
⫺0.31
4
—
⫺0.03
⫺0.35
5
—
0.68**
6
—
7
WEALTH AND TECHNOLOGY VENTURES
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132
R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
TABLE 3 Comparison of Entrepreneurs’ and Non-Entrepreneurs’ Value and Belief Measures
for Wealth and an Aggregate of Other Decision Dimensions
Wealth
t-value (2-tailed
significance)
PANEL A: IMPORTANCE (Z-score)
Entrepreneurs
t-value (2-tailed significance)
Non-Entrepreneurs
⫺0.60
⫺1.42 (ns)
⫺0.30
PANEL B: SALIENCE
Entrepreneurs
t-value (2-tailed significance)
Non-Entrepreneurs
3.67
⫺3.60 (⬍0.001)
4.96
4.74 (⬍0.001)
PANEL C: SATISFACTION
Entrepreneurs
t-value (2-tailed significance)
Non-Entrepreneurs
4.11
⫺1.38 (ns)
4.66
0.43 (ns)
PANEL D: BELIEF DIFFERENCE
Entrepreneurs
t-value (2-tailed significance)
Non-Entrepreneurs
24.50
2.87 (⬍0.005)
⫺4.64
0.45 (ns)
5.09 (⬍0.001)
1.60 (ns)
0.15 (ns)
1.96 (ns: 0.06)
3.08 (⬍0.005)
Other Decision
Dimensions
0.06
1.42 (ns)
0.03
4.77
⫺1.20 (ns)
5.01
4.01
⫺0.50 (ns)
4.15
27.10
2.55 (⬍0.01)
13.70
The Salience of Money
Results for salience are reported in Panel B of Table 3. Hypothesis 3 was not supported.
Not only did entrepreneurs rate “wealth attainment” as no more salient than other dimensions, the direction of the pattern is opposite to our predictions. Wealth was significantly less salient to entrepreneurs (␮ ⫽ 3.67) than an aggregate of the other decision
dimensions used in this study (␮ ⫽ 4.77, t ⫽ 4.74, p ⬍ 0.001). Non-entrepreneurs rated
wealth as significantly more salient than did entrepreneurs (t ⫽ ⫺3.6, p ⬍ 0.001), but
rated an aggregate of the other dimensions similarly to entrepreneurs (t ⫽ ⫺1.2). Again,
we did not find evidence in favor of Hypothesis 4, and the finding indicates an effect
in the opposite direction of our prediction. Entrepreneurs considered “wealth attainment” to be significantly less salient to their venturing decision than did non-entrepreneurs. Rankings of the salience of the eleven decision dimensions again bolster these
findings (Table 4). Wealth ranks 10th of 11 in salience for entrepreneurs, but ranks 5th
for non-entrepreneurs. This finding indicates that these latter managers were thinking
much more about wealth attainment than were the entrepreneurs at the time their respective career decisions were being made. Only the dimension called “stability” was
rated as less salient for entrepreneurs, and stability was added as a dimension only because of the potential importance to non-entrepreneurs as indicated in our pilot study.
Satisfaction with Wealth Attainment
We predicted that entrepreneurs would be less satisfied with their wealth attainment
at the time of the decision than with their attainment in other decision dimensions. As
Panel C of Table 3 indicates, our findings suggest no difference in levels of satisfaction
between the wealth rating and the aggregated satisfaction rating of the other dimensions
(t ⫽ 0.43), thus providing no support for Hypothesis 5. Non-entrepreneurs rated satisfac-
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TABLE 4 Summary of Importance, Salience, and Satisfaction Ratings
Entrepreneurs
Dimension
Wealth
Vision
Stability
Power
Lifestyle
Leadership
Innovation
Independence
Ego
Contribution
Challenge
Non-Entrepreneurs
Importance
Salience
Satisfaction
Importance
Salience
Satisfaction
(Wealth ⫽ 100)
100
309
150
208
229
242
317
315
160
221
305
(1–7)
3.67
5.58
2.78
5.04
5.00
4.29
5.74
5.18
4.53
4.60
4.94
(1–7)
4.12
3.49
4.39
3.76
4.44
3.99
3.89
4.08
4.18
3.91
3.98
(Wealth ⫽ 100)
100
143
113
157
186
169
144
161
130
171
193
(1–7)
4.96
5.02
4.28
5.07
5.93
4.71
4.75
5.11
4.54
4.79
5.88
(1–7)
4.66
3.48
4.17
3.68
4.75
4.46
4.18
4.36
4.18
4.16
4.04
tion with wealth attainment as slightly but not significantly higher than satisfaction with
other dimensions at the time of their decision (t ⫽ 1.96).
When comparing the two groups of participants, we find no significant difference
between satisfaction levels of entrepreneurs and non-entrepreneurs (t ⫽ ⫺1.38). We
therefore have no support for Hypothesis 6. Both groups of participants were reasonably satisfied with wealth attainment at the time they made their decisions. As noted
in Table 4, only three dimensions received a higher satisfaction rating than did wealth
for entrepreneurs, and only one (lifestyle) for non-entrepreneurs.
In summary, our findings indicate that money is not valued as highly in the decision
to found a venture as we predicted. In fact, “wealth attainment” was ranked at or near
the bottom of all three of our value measures, especially by entrepreneurs.
Beliefs About Wealth Attainment
Relative Belief Differences
The scores listed in Panel D of Table 3 as “belief differences” are average differences
between the percentage chance that participants believed they had of getting all the
money they wanted with the new venture and the percentage chance they believed they
had of getting all the money they wanted if they selected the higher of the previous
position or next best alternative. On average, the entrepreneurs in our sample believed
that they had a chance that was 24.5% better of getting all the money they wanted by
venturing than by staying where they were or finding another job, whereas they thought
that the belief difference aggregated over the other decision dimensions was 27.1% better, a non-significant difference (t ⫽ 0.45). We predicted that entrepreneurs would state
that the difference between what they believed their chances were with the new venture
alternative and what they believed their chances were with the better of the other two
alternatives would be greater for the wealth dimension than for an aggregate of the
other dimensions. Therefore, Hypothesis 7 was not supported.
Entrepreneurs did not have higher belief differences between a new venture and
other alternatives for wealth than for the other dimensions. This finding indicates that,
contrary to predictions of a single attribute model of utility, these entrepreneurs believed that their chances for attaining desired levels of dimensions such as innovation,
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
vision, and independence were just as high or higher than their chances for attaining
desired levels of wealth. Assessments of probabilities for attaining wealth did not drive
the decision to found a high-technology venture. But assessments of probabilities for
attaining wealth did drive the decision not to found a high-technology venture. Nonentrepreneurs revealed beliefs about significantly lower chances for attaining their most
desired level of wealth than the other decision dimensions (⫺4.64% vs. 13.7%, t ⫽ 3.08,
p ⬍ 0.005). This information, combined with non-entrepreneurs’ ratings of importance
and salience of wealth attainment, helps explain why this group did not decide to found
a venture.
Comparative Belief Differences
We also predicted that the belief difference for “wealth attainment” would be greater
for entrepreneurs than for non-entrepreneurs who did not start a high-technology business. Indeed, entrepreneurs were more optimistic about their chances of attaining their
most desired level of wealth. Therefore, we did find support for Hypothesis 8 (t ⫽ 2.87,
p ⬍ 0.005). But entrepreneurs were also more optimistic about their chances of attaining
desired levels of other dimensions by founding a new venture. Entrepreneurs’ beliefs
about chances of attaining wealth are no more significant to the decision to start a new
high-technology venture than are their beliefs about other important career decision
dimensions; both are quite high. This indicates that entrepreneurs are much more optimistic about their chances for attaining desired levels of all dimensions through a new
venture than either a previous position or a next best alternative. Thus, although we
find support for Hypothesis 8, wealth alone does not discriminate entrepreneurs from
non-entrepreneurs. Rather, it is optimistic beliefs in general that discriminate. Therefore, beliefs about chances for wealth attainment may or may not have affected entrepreneurial decisions in this case, but beliefs about wealth attainment seemed to have
some effect on the decisions made by people who decided against founding a venture.
Absolute Beliefs
When we examined absolute beliefs about chances for wealth attainment for each alternative, we found that 13 of 51 entrepreneurs, or 25.5%, selected an alternative for which
they did not state beliefs in the highest chances for desired wealth attainment [Z ⫽ 17.58;
p ⬍ 0.0001]. Therefore, Hypothesis 9 is rejected. Six of 28 non-entrepreneurs, or 21.4%,
selected an alternative for which they did not state beliefs in the highest chances for
desired wealth attainment. Thus, the findings were in the opposite direction to that predicted by Hypothesis 10 (though not significant), allowing us to reject Hypothesis 10.
Entrepreneurs do not seem to choose the alternatives that they believe have the highest
chances for wealth attainment more often than do non-entrepreneurs.
We further asked entrepreneurs about the minimum probability level for attaining
the most desired level of wealth for which they would still be willing to start a venture,
holding the probabilities for their other alternatives constant. Data for two of these entrepreneurs are incomplete and we excluded them from analyses. Of the remainder,
39.6% (or 19 of 49) indicated that they would still be willing to start a business even
when the probability for obtaining the most desired level of wealth was lower than that
of the highest other alternative. This finding is significantly different from zero [Z ⫽
27.14; p ⬍ .0001], suggesting that a significant number of entrepreneurs were willing
WEALTH AND TECHNOLOGY VENTURES
135
to compromise their wealth expectations for the privilege of starting a venture. This finding
also suggests that other dimensions will compensate for a lower expected wealth effect.
Concern for Money as a Discriminator Between Entrepreneurs and Others
We predicted that we could distinguish entrepreneurs and non-entrepreneurs based on
the entrepreneurs’ concern for money. This concern for money would be demonstrated
through values and beliefs. In terms of the three value measures that we investigated,
the hypotheses regarding importance, salience, and satisfaction were rejected. In terms
of our belief measure, although we found that entrepreneurs believed they had much
better prospects of attaining wealth through founding a new venture, they also believed
that they had better prospects on other dimensions. Not surprisingly, non-entrepreneurs
were less optimistic.
We were still left wondering if it would be possible to distinguish between entrepreneurs and non-entrepreneurs based on their beliefs and values about wealth. To answer
this question, we conducted a discriminant function analysis, using our data to generate
variables for the discriminant function.
The major differences between the entrepreneurs and non-entrepreneurs were revealed in a linear combination of variables, the discriminant function. A function of
belief differences alone (at both 100% and 50% of most desired level) correctly classified 59 of 79 participants as either entrepreneurs or non-entrepreneurs. Because the
salience of wealth attainment to the particular decision to found or not to found a venture proved to be significantly different, the salience variable was added. Including
“wealth salience,” the discriminant function correctly classified 65 of 79 participants.
We used a stepwise calculation to determine whether beliefs at the 50% level or 100%
level of most desired wealth were better at discriminating, and found we could exclude
the belief difference at the 100% of most desired level of wealth. Standardized canonical
discriminant function coefficients for the two remaining variables were: wealth salience
-0.90, and belief difference at the 50% of most desired wealth level 0.86. Note that wealth
salience results were opposite to our hypotheses, yet still prove to be one of the variables
that best distinguishes entrepreneurs from non-entrepreneurs. These findings suggest
that we can distinguish a group of people who successfully start new ventures by their
regard for wealth as a less salient factor, and their beliefs in higher chances of a new
venture producing the most desired wealth level.3
DISCUSSION
Our findings do not support the common perception that money is the only, or even
the most important, motive for entrepreneurs’ decisions to start new high-technology
ventures. For the group of technology entrepreneurs surveyed during this study, personal wealth attainment is significantly less important and less salient than an aggregate
of other dimensions. It also has a lower salience and importance for non-entrepreneurs
considering the decision to found a new venture. Entrepreneurs did not always choose
the career alternative that they believed had the highest chance of providing them with
3
We collected data on the ‘most desired’ levels for wealth and for all other decision dimensions, and
these values served as the focal point for the belief estimates across all alternatives. So reference here to the
‘most desired’ level of wealth does not imply that it was either more salient or important.
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
their most desired level of wealth. Wealth salience results were opposite to our hypotheses, yet still prove to be one of the variables that best distinguishes entrepreneurs from
non-entrepreneurs.4 Our findings suggest that we can distinguish people who start new
ventures from those who don’t by their beliefs in higher chances of a new venture producing monetary returns and surprisingly, by their regard for wealth as a less salient
factor to their decisions.
It may be possible that, although entrepreneurs did not have a high salience for
wealth, their much higher beliefs for wealth still motivated the founding decision. The
difference in beliefs, however, was not significantly greater than entrepreneurs’ optimistic beliefs about chances of attaining desired levels of other dimensions (indeed, it was
generally lower), although it was significantly higher than the non-entrepreneurs’ belief
difference measures for wealth. Here too, the entrepreneurs’ stated beliefs regarding
the chances of attaining their desired levels of the aggregate of other dimensions were
higher than those of non-entrepreneurs. The entrepreneurs were simply more optimistic
at the time of their decision than the non-entrepreneurs. This finding is consistent with
other studies’ findings of overconfidence among entrepreneurs (e.g., Busenitz and Barney 1997; Cooper, Woo, and Dunkelberg 1988). The finding that entrepreneurs’ salience
of wealth was lower than both their salience of other dimensions and the salience of
wealth for non-entrepreneurs suggests that these optimistic wealth beliefs alone did not
drive the founding decision.
Although consideration of individual hypotheses does not allow us to conclude with
confidence that money does not matter to decisions to found new ventures, the pattern
of results is quite persuasive. For example, entrepreneurs’ ratings of value elements
allow us to conclude that, relative to other decision dimensions and compared to nonentrepreneurs, entrepreneurs do not consider wealth to be overly important or salient
to their venturing decisions. Yet if entrepreneurs believed their outcomes on other decision dimensions would not change across alternatives, it would still be possible that
money was driving the decision. However, our findings on belief differences suggest
that entrepreneurs did believe that they could substantially better their outcomes on
other dimensions by venturing—in fact, they believed they would achieve the same or
higher gains in other dimensions as they would with money. Furthermore, the finding
that entrepreneurs were willing to compromise their wealth expectations to venture suggests that other factors were indeed driving the decision.
We argued that testing a single attribute decision model before testing a multiple
attribute model was logical based on concerns for parsimony. If a single attribute could
explain decision behavior, then no future inquiry would be required. Our findings here
that wealth is not the answer motivate further study into how dimensions such as independence, challenge, contribution, and ego did affect the decision to found a new hightechnology venture.
Limitations
There are several possible limitations to this research. First, one might argue that entrepreneurs or non-entrepreneurs would hesitate to indicate how wealth attainment fits
4
We did not attempt to discriminate using dimensions other than wealth. It is possible that beliefs and
values for other dimensions, singly or aggregated, could in fact discriminate better than wealth beliefs
and salience.
WEALTH AND TECHNOLOGY VENTURES
137
into their value scheme for reasons of social desirability. Anticipating this criticism, we
included a decision dimension, ego, that is arguably even less socially desirable than
wealth attainment. In a business context, it would seem less appropriate to strive toward
ego maximization rather than wealth maximization. However, when asked about “ego,”
the entrepreneurs, as well as the non-entrepreneurs, did not hesitate in claiming its importance to their decisions, though many of them grimaced while doing so. “Ego” was
rated ahead of other dimensions, including wealth, even though prevalent stereotypes
and meanings of ego are certainly no better than those of “wealth attainment.”
Second, the interviews collected retrospective data that, by their nature, are prone
to bias (Fischoff and Beyth 1975; Golden 1992). One of the reasons that we selected
the high-technology sector was to minimize the time lag between career decisions and
the interviews for this research. Managers and entrepreneurs in this sector observe rapid
change in the industrial landscape and in their career opportunities. Initially, we hoped
to limit the interviews to individuals who had either considered starting a new venture
or who had done so within the last 5 years so as to minimize error from retrospection.
This limit proved to be impractical. Some high-technology businesses do not achieve
measurable success until they have been in existence for more than 5 years. Ideally,
we would be able to interview nascent entrepreneurs about their decision making, and
then track their progress. This is a possible future project, but for the purposes of creating and testing the viability of our model, we needed founders of established businesses.
Perhaps entrepreneurs forgot how much wealth attainment concerned them at the
time of their decision. However, since we asked about many dimensions, there is no
reason to expect that their memories about wealth attainment would be any worse than
those concerning other dimensions. Bias in these memories remains a valid criticism
(Golden 1997), and as interviewers, we attempted to remind participants repeatedly
that we needed them to rate the variables in accordance with the way they considered
them at the time the decision was made. Because interviewees began the interview by
telling us detailed stories about their founding decision (including information about
their personal lives and circumstances), we felt they would be more able to mentally
return to their cognitions at the time of the decision.
Alternatively, non-entrepreneurs may have retrospectively biased their beliefs
about the wealth-producing prospects of ventures downward to avoid cognitive dissonance (Festinger 1957) since they did not start ventures. However, this does not explain
why the non-entrepreneurs gave a higher salience and importance to wealth than
did entrepreneurs.
As interviewers, we were very pleased with the attention to task, and forthright
manner that the majority of participants displayed during our sessions. All seemed very
interested in our research and results, as well as the opportunity to explore their own
decision making from the perspective of our model. Thus, we take these data at face
value, and based on this research, we conclude that these decisions to found high-technology ventures were not driven by prospects of wealth attainment. Rather, wealth is
a welcome by-product that most entrepreneurs believed they would achieve if they pursued their goals regarding other decision dimensions.
The third limitation relates to three concerns we mentioned with respect to respondents’ beliefs. Our data did not include a full distribution of payoffs and associated probabilities for the decision dimensions for reasons of practicality. Instead, we asked respondents to identify their most desired level of wealth and consider that figure when
calculating probabilities across alternatives. While we cannot rule out that an expected
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
value calculation based on a full distribution of payoffs and probabilities might lead to
a different choice, we do feel that respondents told us their “most desired level” of
wealth, and not some satisficing level.
Our analysis of beliefs also did not address the risk aversion of respondents or their
desires for a stable pattern of payments. However, if our assumption that entrepreneurship is both riskier and less stable than employment is accurate, we would expect the
incidence of entrepreneurship choice to be decreased. Our findings, then, are conservative: a significant number of entrepreneurs chose entrepreneurship even when they had
lower wealth beliefs for that option, despite its less attractive stability and risk characteristics.
Our analysis of beliefs also did not address the option value of either employment
or entrepreneurship. However, since we asked respondents to consider their income
stream for a 5- to 10-year period if they chose each of the alternatives, we can expect
they implicitly considered option value when stating their beliefs, at least to the extent
that they considered their option value when they were actually making the decision
to venture.
A final limitation relates to the generalizability of our data. Our sample consisted
of high-technology managers and entrepreneurs in British Columbia. It is likely that
high-technology entrepreneurs differ in substantial ways from other entrepreneurs. Our
sample indicated high salience and importance of such factors as innovation, vision, and
challenge. A group of entrepreneurs in another sector is less likely to rate these findings
as high. To the extent that stereotypes about “techies” are true, it may be that hightechnology entrepreneurs are more excited about getting their new innovation into the
marketplace than they are about making major economic gains from it. To the extent
this is true, investigations of entrepreneurs outside of high-technology industries might
yield a different set of findings.
The British Columbia milieu might create some additional generalizability issues.
Some of our participants (both entrepreneurs and non-entrepreneurs) discussed desirability of living in British Columbia because of climate and lifestyle advantages, despite
facing more limited job market prospects for high-technology employees. This may have
diminished the importance of money for both entrepreneurs and non-entrepreneurs,
as they willingly sacrificed wealth for lifestyle.
However, both groups would presumably be affected the same way by the atmosphere, leaving unexplained differences between the groups in their rated importance
and salience for wealth. It is also possible that Canadian entrepreneurs are less focused
on wealth attainment than entrepreneurs in other countries, and so studies in other locations might yield a different pattern of findings. Further research is required.
Implications and Directions for Future Research
Wealth was more important and more salient to those who did not start a technology
venture, and we believe that this finding calls into question the stereotypical role of
money in new venture creation. One might also wonder if concerns about wealth attainment actually hinder venturing behavior. If a segment of nascent entrepreneurs believes
that greed, or at worst, a prominent concern for wealth attainment, is a requirement
for successful venturing, this segment would be demotivated by conventional wisdom.
Our findings suggest that as teachers of entrepreneurship, we should communicate the
WEALTH AND TECHNOLOGY VENTURES
139
value of a balanced set of decision dimensions, and encourage the segment of entrepreneurs who value this balance.
Our findings also suggest that venture capitalists who are looking for a strong
money motivation from entrepreneurs may benefit from rethinking their perspective.
Two of our subjects volunteered information that they had problems obtaining financing
because the venture capitalists felt they were not focused enough on potential monetary
gains from the venture. Once they adopted a money-focused posture in interviews, they
did in fact obtain venture capital financing. If successful growth-oriented entrepreneurs
are not money-focused in venturing decisions, it may be that venture capitalists are turning down worthwhile projects that will generate desired returns, perhaps as a byproduct.
Our initial interpretation of these results answers the main question posed in this
paper. Wealth attainment does not matter much, relatively speaking, to our entrepreneurs’ decisions to found a high-technology venture. Our hypotheses, based on classical
economic theory, were soundly rejected. The entrepreneurs in our study did not found a
business simply to get all the money they wanted. They believed that founding a business
provided a good chance to achieve their desired level of wealth, but wealth attainment
was not the motivating factor. Money is not why they became entrepreneurs. The only
hypothesis to receive empirical support involved differences between the beliefs of entrepreneurs and non-entrepreneurs at the time of the decision to found or not to found
a technology venture. Most entrepreneurs identified that they had almost no chance
of attaining their most desired level of wealth as a wage earner, but that this was not an
important or salient consideration. Truly, the entrepreneurs believed they would attain
more personal wealth by venturing, but they also believed they would attain more of
the other dimensions that they indicated were more important and more salient. The
other decision dimensions that we use in our model simply matter as much or more
than did money in the decision to found a venture.
These findings have substantial implications for research in entrepreneurship. Classical models, which assume money as the primary motive for entrepreneurial activity,
require reexamination.
Future research in entrepreneurship would benefit from focusing less on wealth
attainment and more on belief differences and on other motives for venturing. Our finding that entrepreneurs’ beliefs were higher than those of non-entrepreneurs for all of
the decision dimensions suggests that venturing decisions are driven by optimism more
than by financial motives. We should note, however, that “optimism” implies beliefs
that are more favorable than they should be. Because we do not have, and it would be
very difficult (if not impossible) to specify, the “true” beliefs, it is possible that the ventures did indeed offer the better prospects for goal attainment that our entrepreneurs
expected. The basis for using the term “optimism” is the general observation that a high
proportion of new ventures are unsuccessful, although the entrepreneurs surveyed for
this study had, in most cases, already established successful ventures. Busenitz and Barney (1997) did find that entrepreneurs tended to be more overconfident than managers
of large corporations in a laboratory study, and suggested a positive role for overconfidence in timely decision making under uncertainty. Similarly, Kahneman and Lovallo
(1993) argue that unjustified optimism biases often compensate for unreasonable risk
aversion biases (though not perfectly). It may be that overconfidence is a necessary prerequisite to entrepreneurial risk-taking. However as Russo and Schoemaker (1983)
point out, “the ideal business person is a realist when making a decision, but an optimist
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R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
when implementing it” (p. 79). Further research is necessary to identify the effect of
overconfidence on venturing.
Our preliminary analysis suggests that other decision dimensions matter more to
entrepreneurs than wealth. This is consistent with the findings of Roberts (1991). We
extend his work by considering a broader set of motives, and by comparing the motives
of entrepreneurs with those of non-entrepreneurs. Our analysis prompts the question,
“If money doesn’t matter, what does?” Because our focus in this paper was to examine
the role of money in venturing decisions, we have little to say here about this question.
Our preliminary findings indicate that entrepreneurs and non-entrepreneurs differed
significantly in the dimensions they valued (see Table 4). Specifically, entrepreneurs
rated innovation as significantly more salient to their venture decisions than did nonentrepreneurs, and they rate wealth, stability and lifestyle as significantly less salient.
Entrepreneurs rated all decision dimensions other than stability as more salient than
wealth attainment to venture decisions. They also rated vision, innovation and independence as significantly more important than did non-entrepreneurs, but rated stability
and lifestyle as significantly less important. Interestingly, our results indicate no significant differences in ratings of satisfaction with prior positions between entrepreneurs
and non-entrepreneurs. We therefore conclude that dissatisfaction did not drive
these decisions.
More thorough analysis is beyond the scope of this paper, but would be a productive
area for further research. Future analyses will involve the construction of a multi-attribute utility model to see if we can better explain entrepreneurs’ and non-entrepreneurs’
motives for their founding decisions. If we can identify the ways in which multiple attributes, or decision dimensions as we refer to them in this paper, are considered by those
making venturing decisions, and identify values and beliefs that can discriminate between entrepreneurs and non-entrepreneurs, we may be better able to explain decisions
to found new ventures.
Further, if such a model proves to be a good explanatory mechanism, we may be
able to extend it to predictions of who will persist in venturing based on the decision
making of the entrepreneurs involved. To date, psychological profiles of entrepreneurs,
while very common, have not been successful at distinguishing entrepreneurs. This issue
is of interest not only to researchers, but also to potential entrepreneurs, venture capitalists and those who work to foster entrepreneurship. A multiple attribute decision model
provides promise of successful prediction, and is therefore worthy of future investigation.
REFERENCES
Amit, R., MacCrimmon, K.R., and Oesch, J. 1997. The decision to start a new venture: Values,
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APPENDIX A: WEALTH
Our Meaning
Becoming wealthy, making a lot of money, meeting all your financial needs and wants.
Most Desired Level
What was your most desired level of wealth at the time of decision (i.e., best case scenario)? Assume a time horizon of about 10 years.
Least Desired Level
What was the least desired level that might have arisen under any circumstance (i.e.,
worst case scenario)?
Constraints
Were there any minimum wealth requirements that played a major role in determining
the decision?
SALIENCE: How important was wealth in this particular decision?
1
Of no
importance
2
Low
importance
3
Mediumlow
importance
4
Mediumimportance
5
Mediumhigh
importance
6
High
importance
7
Utmost
importance
142
R. AMIT, K.R. MACCRIMMON, C. ZIETSMA, AND J.M. OESCH
SATISFACTION: How satisfied/dissatisfied were you with your wealth attainment in your previous
position, that is, just prior to starting the venture
1
Extremely
dissatisfied
2
Very
dissatisfied
3
Somewhat
dissatisfied
4
Neutral
5
Somewhat
satisfied
6
Very
satisfied
7
Extremely
satisfied
BELIEFS: In the following table, for each alternative, specify your beliefs about the level of wealth
attainment for the indicated scenarios
Percentage of the
desired level
State the chances of
attaining the indicated
level if stay in
PREVIOUS
POSITION
State the chances of
attaining the indicated
level if start
NEW VENTURE
State the chances of
attaining the indicated
level if take
NEXT BEST
ALTERNATIVE
100%
At least 75%
At least 50%
At least 25%
Valuation of Risky Prospects
Now we would like to ask some hypothetical questions but want you to keep in mind
your situation at the time of the decision. We will hypothesize various levels of attainment of your desired level and for each, would like you to consider whether you would
take this assured amount or a venture with the corresponding chances. Indicate whether
you would prefer the assured amount or the risky venture for each line of the following
table
ASSURED AMOUNT
Assume that you
can assure yourself
of attaining the
following % of the
desired level
RISKY VENTURE
Prefer
assured
amount
75%
50%
25%
Chance of getting
your desired level
or
or
or
Chances of getting
the worst level
75%
50%
25%
Prefer risky
venture
25%
50%
75%
REASSESSMENT: If you had the decision to make over, would wealth have been more or less significant?
1
2
Of no
Considerably
significance less
significant
3
Slightly
less
significant
4
Same
5
Slightly
more
significant
6
Considerably
more
significant
7
Highest
possible
significance
WEALTH AND TECHNOLOGY VENTURES
143
APPENDIX B Summary List of Decision Dimensions (from Amit, MacCrimmon & Oesch,
1997)
Wealth:
Vision:
Stability:
Power:
Lifestyle:
Leadership:
Innovation:
Independence:
Ego:
Contribution:
Challenge:
becoming wealthy, making money, meeting financial needs and goals
realizing your own ideas about how the organization should evolve; determining goals
and capabilities that the organization should pursue
feeling certain about political, social, and personal situation; very little chance of unforeseen shocks; feeling comfortable knowing how your near future will unfold
influencing outcomes; making things happen; having an impact; exerting control; having
it your way; being involved in crucial decisions; being in charge
accommodating dual career situations; spending time with family, in recreational opportunities; living where you want; having fun, being healthy
motivating and influencing others
doing something new or different; introducing original ideas about products or processes
having flexibility; being your own boss; working when, where, and with whom you want
standing out from the crowd; winning; creating a legacy; making a name; outdoing
others
helping others; making a difference to your organization, community, industry; creating
opportunities
using your full range of talents; self-actualization; assuming more responsibility; dealing
with a wider range of issues